SCY Chart

[Snoopy]

Half year Finance profit was $1.84m out of $2.10m

Just done a quick EBIT to segment assets ratio for SCY finance. Assuming:

1/ the finance division EBIT is $5m (maybe a bit high)
2/ Smithcorp Finance Assets are $1m + $42.2m + $29.1m = $72.3m

Then EBIT /Segment Assets = $5m / $72.3m = 6.9%

Using just the end of year balance to calculate this is suspect. But compared to the previous year the changes are small. So I think it is fair in this case.

Compare that to the equivalent figure from Dorchester Pacific and Turners (my post 983 on Dorchester thread). (I admit that comparing motor vehicle finance with household item finance is not an apples with apples comparison.)

------

So the FY2014 EBIT for the DPC finance division is $3.360m - $0.01014m = $3.350m

We also are told the segment assets for the finance division total $37,953m at years end.

So EBIT /Segment Assets = $3.35m / $37,953m = 8.83%

Now compare this with the equivalent TUA finance division result:

TUAF FY2013 ($1.861m-$1.151m+$1.926m) / ($10.684m + $14.916m) = 10.3%

------

Despite SCY making most of their profit through finance, - Smithcorp Finance is Smith's City's declared golden goose- , it does seem that the SCY finance division is not as fundamentally profitable as that run by Dorchester Pacific or Turners, both in the motor vehicle lending market.

SNOOPY

[winner69]

What's their leverage /equity ratio like?

[noodles]

Another reasonably respectable result from Smiths considering all the issues over the last few years

EPS of 7.7 cents so currently on PE of about 8

Winner69, on a PE =8, even I might be tempted to have a stab at this retailer.

However, I think to get a realistic figure for operating EPS, we should adjust as follows:
1. Remove the insurance proceeds of $550K
2. Apply a full tax rate of 28%

So now we can calculate a normalised NPAT as follows:
(trading surplus before tax - insurance proceeds) *(1- corporate tax rate)
(4700-550)*(1-.28)=2988

So my normalised NPAT is $2.88mill
EPS=0.057
PE=9.52

Still not expensive, but perhaps not such a bargain

[percy]

What's their leverage /equity ratio like?

Be careful how you work this out.
Two very different equity ratios.One for a retailer,the other for a finance company.
Should you put them together [which is wrong] you get an over geared retailer.

[percy]

----

Despite SCY making most of their profit through finance, - Smithcorp Finance is Smith's City's declared golden goose- , it does seem that the SCY finance division is not as fundamentally profitable as that run by Dorchester Pacific or Turners, both in the motor vehicle lending market.

SNOOPY

I agree with that statement.
My concern is using part of their finance company profits to drive retail sales,24 month and 36 month interest free terms,can be "set" against finance company rather than retail company.
Historically FPF made good profits out of comsumer lending.however Marac's motorvehicle lending was more profitable.
Both forms of lending have very few problem loans.

[percy]

Well a few changes going on the Smiths City share register.Long term holder [former chairman/director] John Holdsworth has sold out.Holdsworth,was an excellent director.I really respected him.
The arrival of Duncan Saville's Utilico,will be interesting!?

[Joshuatree]

Yes ; vaguely remember him doing well in Utilico i think but not shareholders?

[The Grinch]

Arvo,

Surprised no ones made a comment today about SCY's recent report they had Edison commission. Had a skim through and will be an interesting 24 months if there considering moving into Waikato and Auckland space. Agree that they would need to acquire a smaller operator with some sort of distribution centre in Auckland. Wonder how far the SCY team have developed this to date? Do they have half a dozen potentials lined up?

Thought exhibit 10: peer valuation was a bit rubbish (vary different retail groups compared) but other than that pretty respectable report with a steady as she goes mentality. Have kept a lazy eye on this one for a while.

Not likely to dip my toes in just yet but inching closer.

Would appreciate others thoughts.

Cheers

[percy]

Loved the Edison report.According to it the future looks very bright.Share Price value over 80cents.More profits in furniture.....Yes great stuff...
Then read Rick Hellings agm address for a reality check;"We expect trading to continue to be tough and we have to absorb increases in interest rates".
It is not going to get any easier for them.

[noodles]

Loved the Edison report.According to it the future looks very bright.Share Price value over 80cents.More profits in furniture.....Yes great stuff...

yes, written by 2 analysts from London. Come on. Is it even worth reading? Or are they just writing the story management tell them?

thl has commisoned edison as well. It is a shame that our local analysts won't cover the small caps.